Debt rising, Punjab hopes to up non-tax revenue in Budget

Ruchika M Khanna

Tribune News Service

Chandigarh, February 27

As state Finance Minister Manpreet Singh Badal gets ready to present his fourth Budget on Friday, he will once again reveal a burgeoning debt burden on Punjab. This in spite of the fact that he tried to restrict the external market borrowings this year.

As against Rs19,657 crore that the state was allowed to raise this year (scaled down from Rs26,475 crore estimate presented in the Budget), the government has borrowed just Rs11,680.02 crore (as of January 31, 2020). The lesser-than-estimated borrowings would be a small feather in Badal’s cap considering that the state’s ever-increasing debt has been a matter of grave concern. The situation is such that a huge part of loans raised by the state each year go only in servicing the debt.

Figures available with The Tribune reveal that even now, Rs10,238.71 crore has already been sent in servicing of outstanding debt of Rs2.22 lakh crore (till end of January). Till March 2019, the state’s debt was Rs2.12 lakh crore. The amount used for servicing the debt is just Rs1,441.31 crore less than the amount used for payment of interest on loans.

A look at the state’s finances (available for April 2019-Janaury 2020) also reveals that the state’s revenue collection or revenue receipts for this year are much lower than the targeted (only 54.92 per cent of the targeted revenue has been collected). In fact, the revenue collection till January 2020 is almost Rs3,000 crore less than the revenue collection in the corresponding period of 2018-19. At the same time, by cutting down on revenue expenditure, Badal has tried to maintain a balance. The government has spent just 58.62 per cent of the targeted revenue expenditure. Of the total money spent by the state government this year, 58.36 per cent has gone only in the payment of salaries and wages, and pensions (Rs25,163.43 crore). If the amount spent on interest payments were to be included in this, it would make 82.11 per cent of the total expenditure, leaving just 17.9 per cent for development works as well as payment of salaries.

The financial indicators also reveal that the state’s own tax revenue in the first 10 months of 2019-2020 is 59.13 per cent of the expected Rs50,993.62 crore. As against Rs9,476.98 crore that the state was targeting as non-tax revenue during this financial year, only Rs2,113.30 crore has been collected till January. It is here that the Finance Minister is expected to give a broad outline on increasing the collection in the coming year.